The Chief Executive Officer of the Centre for the Promotion of Private Enterprises, Muda Yusuf has said the only way the Federal Government will not resort to borrowing to meet its fiscal obligations is to attract investments.
Yusuf said this in response to Finance Minister and Coordinating Economy, Wale Edun’s comment that borrowing is not an option for the government.
Yusuf said the FG’s decision is a good idea but noted that some economic fundamentals must be fixed.
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He said on Arise TV, “In the microeconomic environment, we still have a lot of issues, especially in the external sector, structural issues must be fixed before getting Foreign Direct Investors (FDI) into the arena. But in the external sector, I think there is a big issue with what is happening now in the Foreign Exchange (FX) sector. And looking at the outlook in the near term and even in the medium term is not looking too comfortable at all.
“Also on portfolio flows, people have been advocating that we need to increase interest flows, portfolio flows are hot money. Some people are cautious about running too much after portfolio flows, that has to be checked. Else, I don’t know if we are going to achieve a stable macroeconomic environment without borrowing.
“I thought by now, the securitization deal which was approved by the National Assembly on the ways and means will have been activated. As of July, net credit to the government is still over N32trn. This has a significant impact on liquidity and the macroeconomic stability being discussed by the minister.”
The CPPE boss however, urged the minister to harness viable entities and prioritise the informal sector players.
He said, “Part of looking for investment is to check what viable entities could be transformed into assets that can attract investments and boost liquidity, particularly forex liquidity because it is our biggest challenge now. Going to the International Monetary Fund (IMF) is not a good idea.
“The informal sectors are the people sustaining the economy despite all the challenges. Because there is a whole lot of creativity, innovation, resilience, hard work, and doggedness in that sector.
“Many of the operators in the informal economy are being harassed by Institutions of the state like the police, tax force, and local government officials by being hostile to them through extorting.
“Their contribution to the economy rakes in trillions. They are very dominant in the distributive sector as well as the agricultural sector, and including them in policy-making will generate revenue for the government.”